Chipotle (CMG) has had a great run during the last year. After hitting a low of around $250 the stock’s climbed past $400.
Now CMG has a P/E of 38. That’s high, even for CMG, which consistently garners a high P/E. I wouldn’t touch this $400 stock unless it dipped below $300.
One Year Chart
Profit growth was oonly 10% last quarter, but obviously the street didn’t mind. Growth is expected to pick up the next couple of quarters. CMG only beat by a penny last quarter, and 2013 profit estimates stayed around the same. Sales increased a modest 18%. This isn’t a top-notch growth stock.
I’m surprised the stock has a 38 P/E considering the estimated Long Term Growth Rate is 20%. This stock has limited upside from here.
Fair Value
I’m taking my Fair Value P/E from 25 to 28 — and that’s generous. Still, this stock is worth $300.
Sharek’s Take
This is a great franchise to own — and I’e owned it in the past — but Chipotle is really too high to buy. This stock could be this price two years from now. Wait for a better entry point.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
